Dec. 12 (Bloomberg) -- OAO Mobile TeleSystems, Russia’s
biggest mobile-phone operator, won’t offer the newest version of
Apple Inc.’s iPhone for the first time since the handset went on
sale in the country in 2008.

“We don’t have a contract with Apple currently,” said
Valeria Kuzmenko, a spokeswoman for MTS, one of the two main
iPhone distributors in Russia. The previous contract expired in
October and the company won’t offer Apple’s iPhone 5 when the
device goes on sale in Russia on Dec. 14. Kuzmenko declined to
elaborate, citing a confidentiality agreement. Apple spokeswoman
Irina Efremova said she couldn’t comment immediately.

MTS is another example of an emerging-market mobile-phone
company that decided against selling the iPhone 5. China Mobile
Ltd., the world’s largest mobile-phone company by users, this
month said it wouldn’t add the iPhone without a deal that’s
favorable for the Chinese company.

“Apple is seeking to pass on to operators not only the
advertising costs in the country, but also logistics and repair
costs,” said Denis Kuskov, head of St. Petersburg-based
researcher Telecomdaily. “As a result, the operators either
have to overprice the handsets or carry losses on these sales.”

Local Laws

MTS will still sell its remaining iPhone 4 devices from the
previous contract. Its MTS Retail unit is retaining a contract
to sell Apple’s iPad tablet computers.

Kuskov said it’s more difficult for Russian operators to
sell some popular handsets with a profit as local laws ban them
from subsidizing the gadget’s price by linking it to a
subscribtion deal. As a result, retailers such as Euroset and
Svyaznoy may become the largest sellers of the iPhone 5 in
Russia, he said.

The device is still popular with the country’s customers.
Since September, when Apple started selling the iPhone 5 in the
U.S. and Western Europe, more than 100,000 of the handset have
been brought to Russia, according to estimates by Telecomdaily.

The price for the 16-gigabyte model on the “grey market”
in Russia has declined to less than $1,000 from as much as
$3,700 in September, according to Eldar Murtazin, an analyst at
Moscow-based Mobile Research Group. The official price may be
higher than in the grey market, making it less attractive for
operators to offer the device, he said.